By Larry Coté, Managing Director, Lean Advisors Inc.

Some recent articles hitting the news indicate that a major aerospace assembler/manufacturer is looking into quality and safely problems. As you read further you start to ‘see’ possible root causes of some of the problems.

What catches your attention is the compensation model for leadership and staff. It stated that management and staff receive bonuses based mainly on financial and DEI (diversity, equity and inclusion). So, the first question that pops to mind is, ‘what happened to Safety and Quality’? As you read further, you find that a small portion of bonuses are in fact, allotted to operational and quality/safety.

Obviously, your impression is that financial and DEI are the most important goals of the company. And we know that if you reward someone and assess them on certain aspects of their performance, then they will gravitate their efforts and attention to those areas where they can meet those important goals and get their bonus. Everybody wants to do a good job!

Communicating and driving consistent goals across a company is important. It is what should be done, except if the selected performance goals drive the wrong behaviours or replace emphasis on other important mandates of the job.

We have said for years, true success must include improvement in at least these three measures – Quality/Safety, Cost and Service/Speed. When a company first starts out, they have to have those 3 elements. The challenge, as a company moves forward, is to ensure that all three continue to be impacted positively and ‘simultaneously’. If you only reach one or two of the three critical measures, that’s a ‘red’ flag and you must go back and assess where and how you failed. If you don’t, and consider only one or two, you will likely find that the missing measure was somewhat sacrificed (impacted negatively) in order for the other(s) to succeed – not true success.

This limited success thinking becomes part of your culture and is driven throughout all levels. People receiving bonuses, plus shareholders if they are involved, are satisfied with the current direction, and are reinforced by the bonus they receive reaffirming they are doing the ‘right’ thing. It usually takes a crisis, or some critical negative failure, to motivate someone in a leadership role to realize ‘we are off course’ and then to have the strength to do something about it. In the example I have been reading, the management did seem to have done just that. They are adjusting their thinking and establishing a new reward/measurement system to drive the behaviours they require for the future.

In conclusion, there is nothing wrong with tying bonuses to financial outcomes – almost every company does it. However, it is imperative to ensure that financial, quality/safety, and service/speed, are lumped together and are a major part of the strategy and direction. The company’s measure of success should clearly demonstrate, at the very least, these 3 outcomes (cost, quality/safety and service) at the same time, with rewards/bonuses aligned to promote the desired behaviours that drive all three together.

To stay competitive, small businesses need to embrace improvement, much like their larger counterparts. Yet, navigating change poses a significant challenge. With limited resources at their disposal, small businesses find investing in change particularly straining.

Small business owners may resist change due to the perception that it will demand excessive time and effort or necessitate new tools, administration, and equipment. Emotionally too, there are barriers; after investing significant time and money, there’s a sense of pride in what has been built, and altering operations can introduce stress.

In addition, often small business owners might not recognize potential improvements since their expertise lies more in their industry rather than process innovation. Concerns about employee resistance to change or discomfort with new technology or procedures are also prevalent.

Despite these issues, managing change effectively is essential for a business’s success or even survival. Committing time to implement improvements creates a conflict of priorities – what gets pushed aside to accommodate this investment?

A business owner’s first step is assessing the potential benefits of change in terms of cost, quality, and speed. A rapid and efficient method to gauge this is through Value Stream mapping exercises, which offer a clear depiction of the current process and develops a future state, highlighting areas ripe for immediate minimal cost improvements such as Visual Management Boards, 5S, or Mistake-Proofing.

An ideal outcome would be substantial improvements based on Value Stream Mapping without spending on new assets, technology, hiring additional staff, or expanding space.

The planning for the ‘Future State’ encompasses a timeline and scope for approximately two to three months, incorporating success metrics and resource allocation, allowing for progress tracking and making well-informed decisions.

Key to successful change is focusing on leadership style. Engaging basic Change Management principles is crucial, involving transparent communication about the necessity for change, involving staff throughout the process, providing needed resources, demonstrating the advantages of change to employees, progressing through manageable steps, and seeking expert advice in Change Management.

While small companies might not have an internal Change Management team, some existing expertise can be augmented by external Lean and Change Management professionals, potentially subsidized by grants.

Indeed, the apprehension related to change stemming from fears of the unknown, scant resources, employee resistance, comfort with the status quo, and lack of understanding, is a common sentiment.

Nevertheless, by fostering open communication, allocating sufficient resources, emphasizing the benefits, taking manageable steps, and acquiring expert assistance, small business owners can conquer these challenges and quickly propel their business into stronger growth, profitability, and overall success.

It’s a frequent notion that everyone is too occupied to tackle change presently and that delaying until next year could be more manageable. Improvements can be made painlessly and low cost. In today’s competitive landscape, you don’t have a choice — make positive changes or risk losing to your competition.

Contact us to discuss this topic or any other business improvement concepts of interest — corp@leanadvisors.com.

In the wake of Hurricane Sandy’s devastation in New York City in October 2012, food aid organisations were overwhelmed with demand. The existing processes were slow and inefficient even with the use of food trucks and volunteer efforts for food packaging.

Toyota stepped in by offering expertise from their seasoned Toyota Production System practitioners well-versed in Lean methodologies. These professionals transformed the food aid distribution approach by implementing Lean problem-solving techniques. The enhancement was substantial, as box packing times were slashed from 3 minutes to 11 seconds, without altering the workforce, space, or adding equipment.

This scenario highlights a key principle: view every obstacle or difficulty as an opportunity for improvement. Teams collaborated to focus on enhancements rather than fault-finding, overcoming numerous procedural barriers and organizational challenges.

Solving problems may be evident, yet it is common for businesses and organizations to value workarounds deployed by their top employees. They mistakenly often overlooking inherent problems, or accept these fixes as routine operation, not realizing they’re settling for inefficiency which escalates costs and frustrates clients and embeds ‘waste/non-value’ into standard procedures. It hampers advancement and raises the likelihood of unsuccessful outcomes.

Utilizing a simple methodology like the Fishbone methodology can elevate your organization’s quality, efficiency, and customer service to greater heights.

An esteemed tool for Lean problem resolution, the Fishbone Diagram was developed by Japanese engineer Ishikawa in the mid 1900s. Originally crafted for addressing quality discrepancies in production, this tool has become versatile for numerous troubleshooting in many environments both production and service. It’s also referred to as the Ishikawa or Cause and Effect Diagram and remains integral to practitioners of Lean, Six Sigma, and adherents to ISO Quality standards.

The Fishbone Diagram systematically charts all possible reasons for a setback, categorizing them to reveal linkages. As a methodical idea development aid, it promotes discussion. Comprehending causality is vital before implementing solutions, which underpins the purpose of the Fishbone Diagram.

Case Study/Example – Long-term Care Facility – Problem – Patient Fell

A) Analysis/Facts

• Time of fall: change of shift from days to evenings
• Location of fall: resident’s bathroom
• Witnesses: resident and aide
• Background: Resident was to be transferred with two staff members, or with one staff member using a sit-to-stand lift.
• Information from interviews:
  • Anxious resident needing to use the bathroom urgently.
  • The aide helped resident transfer from wheelchair to toilet with NO lift; resident fell and was injured.
  • The aide stated she did not use the lift because the battery was being recharged, and there was no extra battery available.
  • The aide stated she understood that the resident could be transferred with assist of one.

B) Utilized a Fishbone Diagram to Understand the Problem

Why use the Fishbone problem-solving tool

• Defines the issue
• Engages the staff
• Being a visual tool, it is easy to understand and analyze.
• Methodical and reduces personal bias.
• Identify the root cause of the problem.
• Locate bottlenecks in the process.
• Find ways to improve the process.
• Involves an in-depth discussion of the problem, which educates the team.
• Prioritizes further analysis and helps you take corrective action.

C) Results immediately discovered using Fishbone

• No process in place to ensure that every lift in the building always has a working battery.One battery for the lift on this unit is no longer working, and the other battery was being recharged.
• There is no process in place to ensure timely communication of new care information to the aides.New transfer information had not yet been conveyed to the aide. The aide’s “care card” still indicated transfer with the assist of one resident.

As a collaborative framework, the Fishbone Diagram elevates problem-solving efficiency, team engagement, and skill-building opportunities. Lean Advisors Inc.’s training programs on implementing the Fishbone Diagram have propelled many organizations towards embracing this robust problem-solving technique.

For further details about employing the Lean Fishbone Diagram and its potential advantages for your company, please contact Julia Novik, CEO of Lean Advisors Inc., at jnovik@leanadvisors.com.

Before giving out money, maybe we should be asking some simple questions

• ‘How much money will it take to fix Healthcare?’
• ‘Why does healthcare not seem to improve (and in some cases gets worse) as more and more money is injected?’
• ‘Why do other healthcare organizations spend less per capita and have better service and quality?’

Throughout the Healthcare sector, we are blessed with excellent dedicated medical professionals and support workers. They accomplish miracles in a system that we all agree is broken, and they somehow give us the care we require.

With out a doubt, Healthcare is an area where we, as taxpayers, should ‘invest’ some of our tax dollars. The key word here is ‘invest’ not ‘spend’. Invest means we are expecting a positive result/return such as better quality, service, or efficiency and hopefully all three.

Healthcare is a massive and complex environment with many levels of care, administration, departments, oversight agencies, government groups, and added to that complexity is the fact that it is dealing with ever-changing demands/needs of people.

The concern is giving organizations large sums of money without any solid detailed plans with calculated results, and without analysis of previous funding outcomes, is reckless/risky. Without taking the time to complete an analysis of past experiences, and understand the current state (baseline) which includes understanding all the potential of existing resources which entails knowing the current ‘waste/non-value’ in the system, will result in nothing more than guessing what is really needed – people, equipment, space etc. It is impossible to develop a future vision, a strategic direction, or an effective tactical plan. The likely outcome is you keep ‘repaving the cow path’ (which has done many times already).

Giving out large amounts of money to any large complex organizations without a solid business case seems reckless. Especially since this has been tried many times over the years and has proven to be unsuccessful in meeting expectations. I repeat, I am all for ‘investing’ in Healthcare. I just think it should be broken down, planned, and distributed to areas that demonstrate detailed business plans based on 1) past experience, 2) current state analysis, and 3) future state vision/direction/plan and have a calculated measurable ROI in quality, service and efficiency.

Canadian Health Manager News – Jan. 25, 2024 – Leger asked people to choose words that come to mind when they think about Canada’s healthcare systems, 66% chose “long waits,” 42% chose “stressed” and 40% chose “failing.”

We are almost a quarter of the way through the 21st century and those of us who were around 50 years ago couldn’t have imagined the speed at which technology and change would happen.

In fact, most of us have no way of knowing what amazing breakthroughs are just around the corner. Innovation is moving at light speed. In fact, I was having a conversation with an executive with a large Defense Contracting company about new product development and the future, and he stated, “that if you can imagine a future product, we have already invented it”. Now, that can be scary, or it can be exciting. For business, it is exciting.

Technology touches all aspects of our lives, and we rely on it to assist us in our personal lives and our business lives. We can’t function without it, and most of us get excited about the next new ‘thing’.

Businesses and organizations are no different. They are constantly bombarded by new IT, and new faster equipment. Their desire is to access information that allows them to build products faster or service clients faster, with higher quality. It also allows them to make more accurate day-to-day decisions as well as can assist in making strategic decisions. The goal is the technology, or equipment, will allow them to service their clients better while making them more competitive (reducing cost).

Investing in technology, or new equipment, are options every business needs to investigate. They need to determine if the investment will take them to the next level of efficiency, success, and growth. But prior to investing in the new technology, the leadership needs to first understand the impact the investment will have on their bottom-line, and does it support/enhance the end-to-end process.

If the investment is to resolve a bottleneck in the current process, you should first ask if you’re inserting it into an inefficient end-to-end process – one that could be improved for productivity and capacity utilizing your existing resources. There is an old saying ‘Don’t pave the cow path’.

Putting technology into a process that is full of waste makes it very difficult to build an accurate business case for the new technology/equipment. The ‘waste’ in the system will make it impossible to understand what you really need, and how much of it you need to drive you to the next level of service and profitability in the future. And in most cases, it solidifies the ‘waste’ in the system.

A good example is companies researching the installation and implementation of ERP systems to enhance their company’s ability to lower costs and meet the demands/expectations of their customers. On the surface, this type of technology is a no brainer and seems to make sense. As business complexity increases and customers’ expectations rise, one of the options for companies will be to investigate technological enhancements.

Making a major investment financially in technology/equipment includes not only the capital costs but the additional cost such as:

• labour for installation and training,
• possibly new hires of talent to support the ongoing technical support for maintenance,
• layout changes,
• infrastructure upgrades and,
• operation and overall disruption costs while prepping, installing, and commissioning.

These types of variables need to be considered when determining whether the technology will return an acceptable ROI and take the company to the next level of competitiveness in service, quality, and profitability.

Investment today that you will likely have for decades requires a thorough understanding of your future needs and your existing internal processes. Without this knowledge of what is broken currently in your processes, you run the obvious risk of moving the ‘waste’ to your ERP system or technology and basically ‘paving the cow path’ – solidifying the ‘waste’.

To increase your chances of success when integrating technology or equipment, we strongly urge you, and your team, to do a proper analysis using Lean methodologies, especially the Value Stream Mapping (VSM) tool. VSM will allow your organization to accurately ‘see’ your current processes and identifies the ‘waste’ in the system. Then you have the choice to either make the immediate improvements to your processes, or in the very least, know what and where the ‘waste’ is in your processes, and the root causes of the waste.

With this knowledge of the new improved processes, you can make more precise decisions on the technology required to support your improved processes rather than attempting to camouflage the broken processes with technology. Completing the VSM exercise will remove much of the risk of investing in equipment and technology and allow you to move forward with the confidence that you will maximize the ROI and meet your expectations.

You want your investment to be just that ‘an investment’ which supports you in taking your business to the next level of service, cost improvement and quality – competitiveness.

Technology is Important!

Take the Time to Do It Right!

Attention getting headlines!

Some recent articles hitting the news indicating there are quality and safety concerns with a major aircraft manufacturer. The good news is the concerns have motivated the industry to take a serious look at ‘why’ this is happening with the goal of fixing the problems.

One of the immediate potential root causes of current issues is the compensation model the company is using for their staff – both leadership and front line. It was discovered that management and staff receive bonuses based mainly on financial and DEI (diversity, equity and inclusion). So, the first question that pops into mind is, ‘what happened to Safety and Quality as a priority?’

As you read further, you find that a small portion of bonuses are in fact, allotted to operational and quality/safety.

Obviously, your impression is that financial and DEI are the most important goals of the company. And we know that if you reward someone and assess them on certain aspects of their performance, then they will gravitate their efforts and attention to those areas where they can meet those important goals and be recognized with a bonus – we are all driven to do a good job and perform well.

Communicating and driving consistent goals across a company is important. It is what should be done, except if the selected performance goals drive the wrong behaviours or replace emphasis on other important mandates of the job.

We have said for years, true success must include improvement in at least these three measures – Quality/Safety, Cost and Service/Speed. When a company first starts out, they must have those 3 elements to survive and succeed. The challenge, as a company moves forward, is to ensure that all three continue to be a priority and are continuously impacted positively and ‘simultaneously’.

The critical cautionary point is if you only reach one or two of the three critical measures, that’s a ‘red’ flag, and you must go back and assess where and how you failed in the other measures. If you don’t and judge your success on only one or two of the three measures, you will likely find that the missing measure(s) was somewhat sacrificed (impacted negatively) in order for the other(s) to succeed.

This ‘narrow success thinking’ can quickly become part of your culture and is driven throughout all levels. People receiving bonuses, plus shareholders if they are involved, are satisfied with the current direction, and are reinforced by the bonus they receive reaffirming they are doing the ‘right’ thing. It usually takes a crisis, or some critical negative failure, to motivate someone in a leadership role to realize ‘we are off course’ and have the strength to do something about it. In the example I have been reading, the management did seem to have done just that. The good news is, they appear to be quickly adjusting their thinking and establishing a new reward/measurement system to drive the behaviours they require for the future.

We are not picking on this industry – over the past few decades, we have seen leadership in organizations, both public and private, fall into the trap of not combining the 3 measures of service, cost, and quality, as one priority objective/mandate. And those that don’t, fail in the long run.

In conclusion, it is imperative to ensure that all 3 measures, are lumped together and are a major part of the strategy/direction and are tied it to the compensation strategy for all employees to promote the desired behaviours.

Yet, businesses are being hit from all sides – higher employee taxes, higher taxes period, interest rate hikes, increased cost for supplies/utilities/gas, labour challenges, rising rents, repayment of Government loans (impacting mainly smaller businesses) and on and on … It’s a perfect storm.

‘… Insolvencies rose 38% in first 11 months of 2023’ – Reuters ‘Business Bankruptcies’ Feb. 1, 2024

Owners could once believe that they truly were the backbone and felt pride in being an entrepreneur. More recently however, the smaller companies we talk to are feeling less important and excited about building the future for themselves and their employees. An overwhelming number feel that they are being attacked, left behind, and unappreciated.

The frustration for business owners and management teams is that they don’t feel they have a lot options, as most of the cost impact is out of their control, mandated by government and companies much larger than they are.

So, what are their options?

1. Hope the economy turns around,
2. Pray the government hands out a safety net – more funding,
3. Cut already slim margins,
4. Decrease the quality of their product or service,
5. File for bankruptcy,

   Or

6. There is in fact a solution which doesn’t entail hoping or praying and could give companies a better chance to survive, and likely thrive. They could be proactive and find a way to transform their company and reduce their expenses/costs without negatively impacting their service or quality. This option puts business owners/entrepreneurs in ‘total control’. They don’t need to buy new equipment, hire more staff, or build new space; they can utilize what they currently have by learning how to analyze their existing processes and eliminate ‘waste’.

Over the past 25 years that we have worked with both public and private organizations, we’ve found that there is more waste internally than value. The challenge is for them to be able to ‘see’ the waste and learn how to effectively remove or minimize it. For instance, if you have 70%+ waste (which is the amount we have uncovered in businesses over the years) in your processes and you can remove 30% of it without hiring more staff, expanding, or buying new equipment, then you will immediately improve your bottom line. And it can be done very quickly!

The result is you will have opened up capacity and increased productivity, while improving quality, your ability to service your clients better, and lowered your cost.

You have worked hard to build the company, now, more than ever, it is time to take back some of the control and maximize your company’s/organization’s potential. Get excited, transform your business, despite the costs beyond your control – feel Success again – you deserve it!

I recently came across an article in the National Post titled, ‘Our Economy Doing Worse Than They Say’ by Adam Zivo (December 28, 2023). The article focused on how a country’s economic status can be misled by not assessing numbers and indicators properly, which in turn leads to a false comfort level amongst citizens and those leading the country. His findings and thoughts led me to thinking about the similarity to situations we have witnessed with businesses/organizations over the past 25 years, throughout North America. We repeatedly encountered companies that were using numbers and financial indicators that limited their understanding of how well the company was doing.

Most organizations we have worked with focus on revenue growth as the measure of success. And by doing this, they usually determine that they need more space, more equipment or more labour. That can be a very slippery slope.

Growing revenue doesn’t necessarily mean that you will increase your bottom-line results. Implementing change based on that limited thinking has minimal success and in many cases, leads to less than expected results and creates an even bigger problem. They often find themselves to be no more competitive in their sector and in many cases, the competition is using the same tactics.

Adding people, space, equipment and technology may well increase sales and revenue, but this top line number alone will not give leadership the necessary information to make decisions on the future needs of the company. This limited data tends to cloud reality. Often, this ‘go to’ solution becomes the only answer, and some organizations find themselves wanting to add more and more.

The reality is that you can’t build a successful business by purely spending on capital assets or labour. This type of thinking will lead to temporarily fooling yourself that your company is heading in the right direction, while the base of your company is in fact slowly crumbling. It is much more complex.

There is an exception to simple top line analysis: top line numbers may improve with capital investment, and with increasing number of employees, IF demand matches the productivity forecasts. Unless you have that magical crystal ball, using long-term forecasted numbers is very risky.

Of course top line numbers are important, but they are only one isolated data point. When you combine your analysis with other critical indicators/outcomes, such as the overall cost per person of providing the service or product, plus cost of quality and flexibility to meet customer service expectations, you get a more accurate understanding of the requirements necessary to reach the next level of sustainable success and profitability.

True success is when you maximize the resources you currently have, and then, and only then, will you understand what investments the company needs in order to drive to the level of success – growing revenues and profit simultaneously. Optimizing ‘what you have’ first will allow you and your team to make the ‘right’ tactical and strategic adjustments. The top line number alone can impede your judgement, and make decision-making very challenging. Take the time to do a proper analysis with all the facts/measures on-hand and understand your current potential, prior to investing.

As Adam Zivo wrote, “don’t get fixated on creating the illusion of economic resiliency”. Businesses don’t need illusions, they need reality.

Lean Consulting

The good news for owners/leaders is, there are actions fully under their control that they can do to relieve their anxiety and make them more profitable., and which will allow them to ‘do more with what they have’.

Lean thinking, and methodology, is the answer! Lean maximizes your capacity, while improving your bottom-line and the quality of your product/service. Plus, it will do it quickly!

Some of the ongoing misconception is ‘Lean is too complicated, plus too time consuming’ for smaller organizations and they wouldn’t be able to afford it. This thinking/impression needs to change.

Lean is very effective in any business, and results in rapid improvement in smaller organizations.

One of the Lean tools, Value Stream Mapping, when done properly, can be done rapidly and effectively uncovering the waste, or non-value, within the processes. It makes the waste obvious in the end-to-end process – includes office/admin processes as well as any shop floor processes. Value Stream Mapping uncovers the hidden, or difficult to see waste, and demonstrates the potential of your operation both culturally and operationally.

The exciting part about using Lean in smaller organizations is the improvements can happen after the Value Stream Mapping analysis quickly (immediate ROI), and the results of the improvements are measurable immediately.

It results in a rapidly transformed operation, with all staff aligned with the vision of the organization. The organization is now able to do things faster, better, and less cost, meaning they can do more with what they have.

Some of the reasons why there is resistance to implementing Lean?

• Not aware of Lean and its’ capabilities – lack of understanding
• Have the misconception that Lean is only for the manufacturing sector
• Change can be difficult and resisted
• Not sure where to start
• Leadership not able to ‘see’ the total potential of improvement
• Not sure how to adapt Lean techniques to virtual/information flows
• Comfortable with doing things the same as years past
• No time to improve – waiting for the perfect time to improve

Typical improvements:

• Rapid improvement in communications and material flow
• Rework reduction to the point of rapidly freeing up employee time
• Higher employee retention
• Easier to recruit talented employees
• Reduced process and people stress
• Cost savings
• Understanding in detail the end-to-end processes
• Rapid implementation of new policies, or procedures, that are very effective
• Immediate merging of multiple organizations or processes – entire organization working as a ‘team’
• Become more competitive and able to do more with their resources
• Free up space
• Increase pride, and satisfaction within their staff
• Increase competitiveness

Examples of Improvement metrics:

• 40% + Increase in staff availability time
• Normally 20% to 50% reduced rework and scrap
• 20+% Increase in Quality higher than has ever been achieved before
• 10+% $ Cost savings without cutting services or staff

In summary – Lean Works!
GRANTS MADE EASY – Many businesses are making use of the government Grants and our organization has been successful at assisting with Government Grants. We have been supporting businesses in accessing Government Grants ensuring companies get approval assisting with the paperwork and taking the administrative burden off your shoulders.

Call us or send us an email to discuss further – jnovik@leanadvisors.com